Bankruptcy. It’s a word that conjures up bad images, and stirs all kinds of emotion. And we naturally want to avoid bankruptcy. But sometimes, given the circumstances, this mysterious and oft-misunderstood solution can be exactly what is needed so that you can move on with your life.

In 2021, coming out of the the COVID-19 pandemic, there may be lots of reasons to consider your options to getting out of newfound debt. And none of the reasons that caused this situation are your fault. Maybe your company had to shutdown and you stopped getting paid or lost your job.

It’s possible your business got a PPP loan but that got spent quickly. Or you fell behind on mortgage payments, and now your lender wants it all back in a lump sum. Whatever the reason might be, it was a global event for which you want a local lawyer,  and you’re not to blame.

Bankruptcy: pros and cons

Like most things in life, there are pros and cons to bankruptcy. You may know all about some of the bad parts. The negatives in filing a petition can include having it be reported on your credit report for up to ten years. Another negative is that in some cases, you might lose assets (house, car, money, etc). A skilled bankruptcy attorney can help you avoid this.

It also has positives. You can stop creditor harassment. You can answer your phone again without fear. The automatic stay can protect you from lawsuits, and stop paycheck garnishments. And you can finally turn the page and get a new start and move on with your life.

Bankruptcy types or “chapters”

There are two kinds of consumer cases, which we call chapters.

Chapter 7

Chapter 7 is where you don’t pay your debts because you can’t afford to. It’s the most common kind of bankruptcy. It’s generally over in just a matter of months, and then you’ll get the opportunity to start over.

But this chapter has its drawbacks. You might lose some of your assets. Plus, not everyone qualifies for a Chapter 7.  Also, the pre-filing actions get a lot scrutiny, like recent debt, transfers and debt repayments.

Chapter 13

Chapter 13 is like a debt consolidation, managed and administered by the federal government. Interest is frozen on credit cards, and generally speaking, you only repay what you can afford.

It can also help you pay back taxes, stop foreclosure, repay the mortgage arrearages, and provide years of protection from your creditors while you do your best to repay some (or all) of the debt and get a new beginning.

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